An Animation Overrider (AO) is a scripted object that an avatar wears as an attachment. Generally, it resides in a HUD or inside the avatar's shape and is not visible. By editing the contents of an AO, you can add multiple animations to override the default animations your avatar uses.
You may want to see http://www.mermaiddiaries.com/2007/07/day-307-animation-override-ao-tutorial.html.
There is a nice video about creating and uploading animations at http://www.youtube.com/watch?v=h_-3c_aC-O4.
Continue to Chapter 4. Creating Avatars - Creating Gestures.